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Key take-aways

  • 2021 in a nutshell: the first half was about growth, the second about inflation. All along, asset sell-offs kept investors on their toes. So did the pandemic as a wild card.
  • All in all, it was a rewarding year, though with a tilt to the first few months. Commodity and equity returns dominated the safe-haven space, i.e. bonds and gold.

When it comes to the macroeconomic picture, 2021 was a year of two halves. The first half belonged to the growth recovery. Some record quarterly growth numbers were printed. The poster child was the UK recovery in the second quarter, which amounted to more than +20% compared to a year ago. Of course, a lot of this was due to the low base in the previous year. Yet corporate earnings mirrored the economic recovery with record-setting numbers. As of the second half, the focus shifted to inflation rates. Despite their usual lag to growth, observers took the situation as ‘this time is different’. And indeed, the numbers were impressive: some of the producer price gauges printed double-digit growth rates as of the third quarter. Together with a slowing of growth, ‘stagflation’ was back on the table.

Head of Research Christian Gattiker recommends creating a strategy to "put excess cash to work"

Speaking of China
While the macroeconomic picture was challenging enough, some real pain points came to the fore as well. In particular, some breakdowns in asset prices put investor confidence to the test. There were single lines of funds that went under. But also bigger topics, such as the clean-up of excessive leverage in the Chinese housing markets, sent jitters through the global financial system. Speaking of China, the clamp down on some of the technology-related sectors there and a major policy shift towards interference in private sectors pushed related assets down. And finally, the pandemic always found ways to surprise us. Just when hopes of improvement were running high thanks to the vaccination efforts, they were cold-showered by the arrival of new variants

Conclusion for investors
Yet taking risks paid off in 2021: the high-flyers were oil & gas stocks, inflation-linked bonds, and crypto assets, while Chinese equities, emerging market bonds, and gold lagged.

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